Current situation is tricky.Markets have faced resistance at current levels before & though market experts believe that market can offer good returns from this point,retail investors still not looking much convinced.Similarly interest rates are trending down & investment in bond funds & income funds have become more attractive.

So after viewing the current market condition,there is one flow of opinion that monthly income plans which have 20-30% exposure in equity is a better bet.Even if market get corrected from this level there won’t be capital erosion in same proportion & if market moved up sharply there will be some equity exposure which will be helpful. similarly income funds which offers in bond funds & other debt products can offer good combination alongwith MIPs.

History shows that MIPs have offered good returns with lower risk when market have performed better.

Best Monthly Income Plans:

Sr.No

Fund Name

Returns Last One Year

1.

IDFC Monthly Income Plan

13.30%

2.

SBI Magnum Monthly Inome Plan

13.03%

3.

HSBC Monthly Income – Savings Plan

11.80%

Bond Funds:

Sr.No

Fund Name

% Returns – Last One Year

1.

SBI Magnum Dynamic Bond Fund

12.80%

2.

IDFC Dynamic Bond Fund

12.20%

3.

Sundaram Bond saver

11.95%

Income Funds:

Income funds have also exposure towards bonds but since they have more diversified portfolio they carry less risk than pure bond funds.

Sr.No

Fund Name

% Returns – Last One Year

1.

Templeton India Income Builder

11.05%

2.

Religare Active Inome Fund

10.95%

3.

Icici Prudential Income Opportunities

10.55%

MIP Or Bond Funds – Which one is the best?

My opinion is slightly tilted towards MIPs as probability is higher that market will have some upward movement & there is limited downside.So for conservative investor who is looking to think beyond fixed deposits can consider to blend income / bond funds along with monthly income plans with some higher weightage.